Wall Street Gushes Over Netflix Earnings, Putting Its Shares On Track For Biggest One-Day Gain Since January 2021
19.10.2023 - 19:03
/ deadline.com
Netflix shares have come roaring out of the gate, rising 15% on a wave of Wall Street enthusiasm about its latest quarterly earnings report.
The streaming giant soared above analysts’ expectations for third-quarter subscriber gains and earnings, and also reported a surge in free cash flow and signs of growth in its nascent advertising business.
At mid-day, shares were at $398, with trading volume at more than three times normal levels. The upturn has come against a muted backdrop for the broader markets and a mixed bag so far for media and tech stocks.
Laurent Yoon, an analyst with Bernstein, spoke for many in his note to clients. “They crushed it,” he wrote. “The management deserves an Emmy for managing investor expectations.” Yoon maintains a “market perform” (neutral) rating on the stock, however, so he included a caveat. The third quarter results prompt “one key question in terms of subscriber growth: Did Netflix pull-forward future paid-sharing net adds, or is the addressable market for paid-sharing bigger than anticipated? We expect it is likely a bit of both given the magnitude of the beat.”
Michael Nathanson of MoffettNathanson, who also rates the stock “neutral,” likewise had plenty of praise for the quarterly numbers. He told clients the earnings news included “a series of upside surprises across a variety of 2023 and 2024 metrics that have the net effect of materially lifting 2023 free cash flow and 2024 EPS.” That information will “help stabilize Netflix’s recently turbulent stock price,” which came into earnings on an 18% slump dating to mid-September.
Nathanson said a set of price increases phased in by Netflix in three of its biggest markets was as particularly welcome move. The hikes mean that Netflix
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